Pakistan Secures $1 Billion Loan From 2 Commercial Banks

Pakistan has agreed with Standard Chartered Bank and Dubai Islamic Bank for a $1 billion loan at an interest rate of approximately 7.6 percent, contingent on a $500 million guarantee from the Asian Development Bank (ADB). The ADB board is scheduled to approve the guarantee on May 28, reported Express Tribune. The interest rate for the loan will be floating, set at the Secured Overnight Financing Rate (SOFR) plus 3.25 percent. After ADB’s approval, disbursement is expected in the second half of June. The ADB will charge a nominal upfront fee for its guarantee. In the past, Pakistan had shelved a $600 million loan offer from Standard Chartered Bank at around 11 percent interest due to poor market conditions. For the current fiscal year, the federal government budgeted $3.8 billion in foreign commercial borrowing but has only secured $500 million so far. Pakistan’s total external financing plan for the year stands at $23.4 billion, including $13 billion in rollovers from China, Saudi Arabia, the UAE, and Kuwait. A $1.3 billion Chinese commercial loan has already been repaid with an understanding of near-term refinancing.